Harnessing payments technology across government

Why government should be doing more to benefit from recent developments in payments technology

Card payments now account for more than half of all retail transactions in the UK – presenting challenges and opportunities for government. Consumer and business demand for electronic payments over cash is growing. The greater convenience and security electronic payments offer is building trust and interaction with the digital economy.

We pay in person and online, we pay by card and mobile phone, and we pay with watches and countless other connected devices. Contactless payments now account for over 30% of all payments. Security is being enhanced by artificial intelligence and biometrics. Every month new payments innovations come to market, driven by the UK’s flourishing FinTech sector.

The changes resulting from the development of payment technology are not just limited to the consumer. Government also has the opportunity tap into payments innovation to transform services digitally, increase choice, drive inclusion and save costs. In the coming months, we will publish a series of articles on four core areas where the power of electronic payments can make a difference to government and the citizens it serves.

New approaches to procurement and accounts payable

From abiding by the prompt payment code to eInvoicing regulation, or from increasing spend with Small and Medium Enterprises, to getting better value for the tax payer, the government is asking a lot of its procurement and accounts payable functions and at the same time, to do it with smaller budgets and leaner teams. Over two thirds of local government organisations report that they print PDF invoices they receive by email. That is a lot of CO2 and a lot of wasted time and money. The good news is that there are plenty of digital solutions to help. Mastercard Purchase & Pay enables you to integrate procurement and finance systems with electronic marketplaces and our network and data services, meaning you need never process an invoice and reconcile manually ever again.

Supporting those in need

The government disburses over £100 billion in benefits every year. For the majority of recipients, those payments will go direct to bank accounts. But what about the 1.5 million people in the UK who do not have a bank account? Central government pays those benefits into the Post Office Card Account where the only option is to withdraw the funds in cash. Local authorities pay out cash directly. Cash handling is expensive for everyone – both government and the recipient. Multiple studies have shown that there is a poverty premium that is exacerbated by not having access to electronic payments to buy basic goods online or set up direct debits for utilities. The use of prepaid cards to distribute benefits by over 200 public sector organisations in the UK has been a great success, but there is much room for progress and tackling Universal Credit has only just begun.

Paying government

From bus fares to parking fines, school trips to museum donations, there are many reasons we need public sector bodies to collect money from us. With the average Briton carrying less than £5 on them, those organisations that rely on cash collections are facing a real challenge. Contactless payments are a natural evolution. Online payments are shifting from the desktop to mobile. This requires change but presents an opportunity to simplify the payment process.

Unlocking the power of payments data

This year alone, society will create more data than it has in the previous 5000 years of our history. More and more public sector organisations are tapping into this opportunity, using data for intelligent decision-making, to design and refine policy and to enable the delivery of better outcomes for citizens.

Previously, much of the data gathered on payments and financial performance was only available through small samples, surveys or other proxies for actual data. It was expensive to collect, not timely and its accuracy questionable. However, as the economy moves towards greater use of electronic payments, this data can be used to support sustainable urban planning across critical areas such as housing, transportation policing and energy management as well as generating much needed revenue through business rates and tourism.

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